The Importance of Well-Functioning Government-Owned Enterprises: Strengthening Accountability, Transparency and Long-Term Fiscal Sustainability

Government-Owned Enterprises (GOEs) play a strategic role in Nigeria’s economy by operating critical national assets, delivering essential public services and supporting government policy objectives. GOEs sit at the center of critical infrastructure systems- energy, transport and utilities. Despite their importance, many GOEs continue to face operational, governance and financial challenges that limit their ability to operate sustainably. A significant proportion remain dependent on government budgetary allocations, fiscal support and interventions to finance their operations and capital expenditure.

This dependence is often driven by weak financial performance, governance deficiencies and operational inefficiencies. For institutions responsible for managing government investments, such as the Ministry of Finance Incorporated (MOFI), the priority is therefore not simply improving access to finance, but enabling the process of building well-functioning, transparent and accountable GOEs that create sustainable value for the Federal Government. As these institutions become financially stronger and better governed, creditworthiness naturally improves, enhancing investor confidence and creating opportunities for future investment where appropriate.

Better functioning GOEs will enable:

1. Improved Public Accountability and Transparency

Effective GOEs operate under sound governance, transparent financial reporting, strong internal controls and effective oversight. These characteristics improve public accountability, strengthen confidence among stakeholders and ensure government assets are managed responsibly.

2. Better Fiscal Sustainability

Improving financial sustainability allows scarce public resources to be redirected towards other national development priorities. Optimized GOEs are better positioned to generate sustainable revenues, manage costs efficiently and reduce dependence on recurrent government support.

3. Greater Investor Confidence

Investors place significant value on institutions that demonstrate strong governance, financial discipline and operational excellence. Building these foundations enhances confidence in government-owned assets and creates future opportunities for strategic partnerships and investment.

Tools for Building High-Performing GOEs

1. Governance and Performance Frameworks

Strong governance and performance frameworks establish clear roles, responsibilities and accountability mechanisms for boards and management while promoting effective oversight and decision-making. These frameworks enable GOEs to monitor performance, improve operational efficiency and align institutional objectives with national development priorities.

To drive these outcomes, MOFI has developed and implemented a Corporate Governance Scorecard (CGS) to assess governance maturity across key pillars, including board effectiveness, executive management quality, transparency and disclosure, risk management, ethics and digital governance.

2. Enterprise Risk Management (ERM)

An effective Enterprise Risk Management (ERM) framework enables GOEs to identify, assess and manage strategic, financial, operational and compliance risks. Embedding risk management into decision-making strengthens organizational resilience, improves operational performance and enhances stakeholder confidence. To foster a strong risk culture across its portfolio, MOFI established the Risk Leadership Forum, which brings together risk leaders to share best practices, discuss emerging risks and strengthen risk governance. Complementing this initiative, MOFI also holds Risk Management Workshops designed to address critical capability gaps and enhance competencies in governance, risk management and organizational performance, equipping GOEs with the skills required to strengthen institutional resilience and drive sustainable performance.

3. Transparency and Financial Reporting

Timely publication of audited financial statements and adherence to industry standardized accounting and disclosure standards improve transparency, strengthen public accountability and build confidence among government, investors and other stakeholders. In furtherance of this objective, MOFI publishes its Annual Assets Report, which provides a comprehensive account of Federal Government-owned investment assets and supports greater transparency, accountability and oversight in the management of public assets. The report also contributes to improved asset visibility, informed decision-making and enhanced value creation across the government’s investment portfolio.

4. Performance Benchmarking

Benchmarking GOEs against industry peers, comparable state-owned enterprises and international best practices helps identify performance gaps, drive continuous improvement and promote operational excellence. As part of its commitment to strengthening public asset management, in MOFI’s Annual Assets report, GOEs’ performances are benchmarked to industry peers as well as international best practices. This benchmarking supports effective management and value creation across the Federal Government’s investment portfolio, enhances the quality of reporting and strengthens transparency and accountability.

The Path Forward

Improving the performance of GOEs requires sustained commitment to institutional reform. Key priorities include:

• Strengthening governance, accountability and transparency.
• Improving financial management and operational efficiency.
• Embedding enterprise risk management and stronger internal controls.
• Enhancing performance monitoring and value creation.
• Reducing long-term dependence on government support through improved institutional performance.
• Strengthening collaboration among government, GOEs and other stakeholders to drive sustainable reform.

Conclusion

Well-functioning GOEs are fundamental to unlocking the full value of Nigeria’s public assets. While many GOEs remain reliant on government funding, sustained improvements in governance, accountability, transparency, operational efficiency and financial management can transform them into more resilient and financially sustainable institutions. As these reforms take root, stronger institutional performance will naturally enhance creditworthiness, strengthen investor confidence and create opportunities for strategic partnerships and investment where appropriate.

Through initiatives such as the Corporate Governance Scorecard, Risk Leadership forum and workshops, and Publication of annual assets report, alongside enhanced governance, performance monitoring and oversight, the Ministry of Finance Incorporated (MOFI) is supporting the development of a portfolio of high-performing GOEs that deliver greater value for government and the Nigerian people.

By fostering stronger institutions today, MOFI is laying the foundation for a more sustainable, accountable and commercially disciplined GOE sector that contributes meaningfully to Nigeria’s long-term economic growth and fiscal resilience.

For partnerships, collaboration, or further engagement on risk management initiatives, stakeholders may visit the MOFI website at www.mofi.com.ng or contact the Risk Management team via [email protected]